KURT ERICKSON - H&R Springfield Bureau Chief

SPRINGFIELD - Illinois was the first state to openly talk about selling or leasing its state-run lottery as a way to generate cash without raising taxes.

And now, more than two years after the concept was floated by Gov. Rod Blagojevich, there are signs that the Land of Lincoln is inching closer to becoming the first state to actually approve the idea.

With an eye on jump-starting a long-dormant statewide construction program, House Speaker Michael Madigan, D-Chicago, has called the House back to Springfield next week, possibly to act on a plan to lease the state lottery to a private vendor.

Although few details about the plan were emerging Wednesday, it is expected that the proposal would bring in a onetime cash infusion of about $10 billion, most of which would go toward financing road, bridge and school construction projects.

State Rep. John Bradley, D-Marion, a key player in blocking a previous lottery lease proposal, sees the latest development as positive.

"It's not a bad sign," Bradley said Wednesday. "Hopefully, people will work in good faith."

If approved, Illinois would be alone in the nation in privatizing its lottery.

Gov. Rod Blagojevich first floated the concept in 2006, saying the proceeds could be used to shore up the state's underfunded pension systems without raising taxes.

The plan, however, was not embraced by the General Assembly, as critics worried that the loss of a steady stream of revenue would hurt funding for other state programs, such as education.

But the seed planted in Illinois spread across the nation.

At least 10 states have openly discussed the concept, including Texas, Indiana, Vermont, California, Florida, Massachusetts, New York, Michigan and Colorado.

In each of those states, the idea has fallen flat among lawmakers.

Arturo Perez, fiscal analyst with the National Conference of State Legislators, said a prevailing concern among the states is the loss of control over an asset.

In addition, Perez said there are concerns that private companies will be more beholden to investors than state taxpayers, meaning they will push the envelope on expansion.

"One question that is asked is whether you are going to see lottery kiosks everywhere you go," Perez said.

To address concerns of lawmakers about losing their ability to rein in lottery companies, Illinois could impose restrictions on lottery expansion and new games.

It is not clear, however, if lawmakers will consider those types of restrictions when they meet Sept. 10 and 11.

A lottery lease plan approved by the state Senate in May did not specifically address the issue. The legislation was killed by a House panel chaired by Bradley on the final day of the General Assembly's spring session.

It's also not clear whether the latest round of talks will result in anything moving forward. Infighting among Democrats who control state government has kept the issue bottled up, despite widespread agreement that a construction plan is needed.

Democrats in the House say a key part of any deal centers on spelling out exactly which projects the money will fund.

In a sign that relations between Blagojevich and Madigan remain strained, it doesn't appear the governor has a seat at the table in the latest discussions.

"We have not been involved in Speaker Madigan's plan, though we expect they will brief us prior to an announcement," said Blagojevich spokeswoman Kelley Quinn.

Meanwhile, it's not just state officials who are interested in securing this onetime influx of cash.

Behind the scenes of the lottery push are major investment banks, which have dedicated staff to guide states toward a sale.

Illinois, for example, has retained the services of Goldman Sachs, UBS and Scott Balice Strategies.

Among those involved in other states is Bradley Tusk, a vice president at Lehman Bros. and a former top aide to Blagojevich.

Reports note that Tusk, who served as deputy governor of Illinois, has advised officials in other states about the process needed to get a sale under way.

Perez said the interest in the idea by Wall Street is simple:

"Do they stand to gain in this? Yes," Perez said.

kurt.erickson@lee.net|789-0865.